20150728AVU to Staff 21.doc

AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION

JURISDICTION: IDAHO DATE PREPARED: 07/21/2015
CASE NO: AVU-E-15-05/AVU-G-15-01 WITNESS: Karen Schuh
REQUESTER: IPUC RESPONDER: Karen Schuh
TYPE: Production Request DEPARTMENT: State & Federal Regulation
REQUEST NO.: Staff - 021 TELEPHONE: [phone]

REQUEST:

Please provide all documents the Company used to demonstrate the benefits realized by the Company for each capital project costing more than $3 million that the Company has included in its rate base since the last general rate case.

RESPONSE:

Please see the Company’s response to Staff_PR_020 for a detailed description of all ER’s cost/benefit over the $3 million threshold discussed above.

The following ER’s have been incorporated in the asset management report that shows benefits realized by the program over time. This is shown in Staff_DR_021 Attachment A.

ER Number ER Title 2060 Wood Pole Management 2484 Moscow 230 kV Sub –Rebuild 230 kV Yard 2549 Moscow city to North Lewiston 115kV Rebuild

ER 2535 – TCOP Related Distribution Rebuilds – Please see Staff_PR_021 Attachment D for details on the TCOP cost/benefit realization.

ER 7000 – Transportation Equipment benefits realized documents can be found in the Company’s response to Staff_DR_020 Attachment G.

ER 7101 – COF HVAC Improvement - Avista’s central office facilities (COF) were originally constructed in 1956 and the original HVAC equipment has been operating nonstop since then. Parts are no longer available for portions of Avista’s HVAC system, requiring replacement parts to be manufactured in order to perform repairs. Please refer to Staff_PR_020 for a description of the types of cost/benefits for the HVAC improvement. Please see the Staff_PR_021 Attachment B for details of the energy savings realized from the Central Office Facility HVAC Improvement. Please see Staff_PR_021 Attachment C for details of the realized Water reductions as a result of the HVAC Improvement and Long Term Campus Re-Structuring Plan.

ER 7126 – Long Term Campus Re-Structuring Plan - This ER addresses updates to Avista’s central office facilities in order to more efficiently utilize Avista’s COF. This project also allowed the HVAC renovation to be accomplished continuously, rather than in a staged process, which contributed efficiencies to the HVAC renovation. Please refer to Staff_PR_020 for a description of the types of cost/benefits for the Long Term Campus Re-Structuring Plan. Please see the Staff_PR_021 Attachment B for details of the energy savings realized from the HVAC Improvement plan, as noted above. Please see Staff_PR_021 Attachment C for details of the realized water reductions as a result of the Long Term Campus Re-Structuring Plan and HVAC Improvement.

The following ER’s are required capital expenditures in order to provide safe and reliable service to customers or are legally required as a part of the business operations, and as such do not have documents demonstrating the benefits realized by the Company.

ER Number ER Title 1000 Electric Revenue Blanket 1001 Gas Revenue Blanket 1003 Distribution Line Transformers 2055 Electric Distribution Minor Blanket 2059 Failed Electric Dist Plant -Storm 3005 Gas Distribution Non-Revenue Blanket 3008 Aldyl A Pipe Replacement 3246 Construct Chase Rd Gate Station – Post Falls 5005 Information Technology Refresh 6103 Clark Fork Implement PME Agreement
The following projects are still under construction and therefore, will not have any benefits realized by the Company until after completion:

ER Number ER Title 4140 Nine Mile Redevelopment 4152 Little Falls Powerhouse Redevelopment 5106 Next Generation Radio System

ER 4116 – Colstrip Capital Additions: This ER represents programmatic ongoing capital expenditures associated with Units 3 and 4 at Colstrip. Talen Energy operates and maintains Colstrip on behalf of all the owners.  Each year they provide Avista with capital project summaries. Each project has a NPV and IRR calculated where appropriate, while projects identified as a reliability or environmental compliance driven project will be identified as such and an NPV/IRR is not calculated. The realized cost/benefit for these projects are not provided to Avista at this time.

ER 4149 – Base Load Thermal: Because of the volume of projects that are housed under this ER (53 projects to-date that were active since January 1, 2012) and the relatively low dollar value of each individual project (the highest life-to-date expenditure as of June 2015 for a project under this ER is $66 million (however, only $1 million of that expenditure has occurred since January 1, 2012), while 96% of the individual projects have life-to-date expenditures under $100,000), individual cost/benefit analyses or review beyond the business case CIRR have not been performed. Staff_PR_020 Attachment U details the 53 projects mentioned above.

ER 5006 Information Technology Expansion Program –There are several small projects listed in this ER (158 projects) that make up the over $3 million threshold. These projects are smaller in nature and therefore, do not have any further cost/benefit analyses beyond the CIRR.

ER 5138 – Customer Information System (CIS) Replacement: This ER addresses Avista’s four-year effort, referred to as “Project Compass,” to replace its legacy customer information and work management system with Oracle’s Customer Care & Billing system and IBM’s “Maximo” work and asset management application. The need for the replacement was based on the growing business risks associated with the many unsupported technologies that comprised Avista’s legacy system, therefore, a realized cost benefit analyses does not exist. For a description of the Company’s legacy system and the need for its replacement, please see pages 1-20 in the report included in Staff_PR_020 Attachment J, titled “An Overview of Avista’s Project Compass.” This report was also presented in Avista’s initial filing, as Exhibit No. 10 / J. Kensok, Avista / Schedule 1 in Case Nos. AVU-E-15-05 and AVU-G-15-01.

Unsupported technologies refers to computer programming languages, applications, systems and hardware that are no longer manufactured, and for which technical and service support is no longer commercially available.

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